TEMPLE LAW REVIEW
poorly documented assignments fall relatively low on the spectrum, and courtsare split on the effect of these less severe forms of neglected formalities.
However, as the financial institutions’ neglect for the traditional assignment formalities increases in severity, all courts should begin to recognize that foreclosures based on those severely neglected assignments must be prevented.In deciding if and when problem mortgages can be foreclosed upon, courtshave wrestled with several factors. In federal courts, the main question has beenabout the federal standing doctrine.
In state courts, there have been similarstanding analyses, but through the lens of state law.
With the recent revelationsregarding the use of improper evidence and "robo-signers" to prove the elementsof a foreclosure, all courts should be increasingly concerned with the evidenceused to establish a bank’s right to foreclose.
Several state and federal courts have expressly acknowledged two publicpolicies at play when making their decisions.
These two constant andcountervailing policies are (1) the interest in protecting families and communitiesby not allowing financial institutions to foreclose on homes without the legalauthority to do so, and (2) preventing further harm to an economy dependent onthe mortgage industry’s ability to recoup debt.
While several courts haveexpressly considered the two interests above, other courts have disregarded thesepolicies either by allowing foreclosures to go through with inadequatedocumentation or by wiping clean the entire debt on a mortgage when no proof of assignment was presented at the initial filing.This Comment argues that when disregard for the assignment process risesto the level of bringing a foreclosure without a legal assignment, on behalf of anundisclosed third party, or with inadequate evidence, standing should never beafforded to the foreclosing financial institution regardless of the court, governingstate law, or countervailing public policies.
To ensure that banks do not foreclose when they are unable to adequately prove their standing to do so, whileat the same time preventing further damage to the global economy, this Comment concludes that all courts should consider the relevant public policies and that cases reaching the higher levels of neglect should always be dismissed without prejudice or, in bankruptcy, claims should always be given leave to amend.
Part III.A.2 for a discussion of the consequences of an untimely or unprovenassignment.7.
, 2007 WL 3232430.8.
, U.S. Bank N.A. v. Mallory, 982 A.2d 986, 993–94 (Pa. Super. Ct. 2009).9.
Flawed Paperwork Throws Some Foreclosures into Chaos
, Oct. 4, 2010, at A1 (explaining how Bank of America, GMAC Mortgage, and JP Morgan Chasevoluntarily halted foreclosures after realizing that a significant percentage of their foreclosuredocuments had been improperly prepared, signed, and filed).
, 2007 WL 3232430, at *3 n.3 (stating court's feelings on howbanking entities were taking advantage of homeowners);
Hwang, 396 B.R. 757, 765 (Bankr. C.D.Cal. 2008) (considering both markets' reliance on foreclosures and need to prevent banks from usingneglectful assignments to foreclose),
, 438 B.R. 661 (C.D. Cal. 2010).11.See
Part III.B for a further discussion of these competing policies.12.See
Part III.A.3 and accompanying text for a discussion of how courts deal with severedeficiencies in assignment formalities.